Insights 
VT 
The Swiss Franc is experiencing pressure due to economic concerns within Switzerland. SECO has maintained the growth forecast for 2025 at 1.3% but downgraded the 2026 forecast to 0.9%. This economic uncertainty has contributed to USD/CHF falling to around 0.7910, down 0.30% on the day.
The State Secretariat for Economic Affairs reported Switzerland’s GDP to grow by 1.3% this year, which is below historical averages. A loss of momentum is expected in the latter half of 2025, impacting investor confidence. This announcement comes before the release of Switzerland’s trade balance data.
Dollar Faces Pressure
In the US, the Dollar faces pressure from a government shutdown and expectations of Federal Reserve rate cuts. The stalemate in Washington affects growth outlooks, with nearly a 100% chance of a rate cut projected for the upcoming meetings. Some Fed officials have indicated more easing could occur if labour market risks rise.
Signs of reduced trade tensions between the US and China could help limit USD losses. President Trump hinted at potential tariff reductions, supporting a slight improvement in risk appetite. This could decrease the demand for the Swiss Franc as a safe-haven asset.
The attached table displays USD’s percentage changes against major world currencies, highlighting USD’s strength against the Canadian Dollar.
The current environment shows a conflict between a weakening US Dollar and a Swiss Franc with a poor economic outlook. For now, the immediate pressure from the US government shutdown and expected Federal Reserve rate cuts is the dominant factor. This suggests the path for USD/CHF could continue lower in the near term, possibly testing the 0.7850 level.
Strategy And Market Outlook
We have seen how prolonged government shutdowns, like the one we experienced in late 2018, can create significant uncertainty and weigh on the dollar. With markets now pricing in a near-certainty of a Fed rate cut this month and another in December, the path of least resistance for the dollar appears to be down. Any further delay in resolving the budget impasse will likely reinforce this bearish sentiment.
However, we must be cautious, as the Swiss Franc’s strength is not fundamentally supported. Switzerland’s own growth forecast has been revised down to just 0.9% for 2026, and we are expecting Tuesday’s trade balance data to reflect this slowdown. The Swiss National Bank has a long history of intervening to weaken its currency when it threatens exports, a risk that grows with every tick higher for the Franc.
Given these opposing forces, buying put options on USD/CHF is a sensible strategy for the next few weeks. This approach allows us to capitalize on further downside driven by US weakness while defining our risk should a sudden event, like a US budget deal or Swiss National Bank action, cause a sharp reversal. A bear put spread could also be used to lower the upfront cost of positioning for a continued fall.
All eyes should remain on Washington for any signs of a breakthrough in the funding deadlock, as this is the most immediate catalyst for a dollar rally. We will also monitor the upcoming meeting between US Treasury Secretary Bessent and Chinese Vice Premier He Lifeng. Any positive trade news from that meeting could quickly reduce the Franc’s appeal as a safe-haven asset.
